Why LinkedIn’s Acquisition by Microsoft Will Disrupt the Enterprise Software Market

Originally posted on AltimeterGroup.com.

It was a very smart and strategic move for Microsoft to acquire LinkedIn. With its 433M registered users (and their professional social graphs), not only is LinkedIn a singularly unique asset, its leadership, culture, and organization brings with it a new sense of mission and culture that Microsoft’s CEO Satya Nadella has been pursuing in his turnaround efforts at the company.

Once the acquisition gets finalized and the companies come together, the combined Microsoft + LinkedIn organization will set a course that can significantly disrupt the enterprise software/services space. Here are three reasons why I believe this will be the case:

  • Deep integration of the LinkedIn social graph into Microsoft products will make other offerings feel incomplete. There’s undeniable power in being able to pull social graph information — like a social profile, activities, and their connections — directly into your work stream. LinkedIn enables this today at a basic level within email, calendars, and your CRM. But the real potential is for LinkedIn to provide an extra, exclusive level of analysis and insight to Microsoft customers — especially for Outlook and its CRM offering, Dynamics. One key player to watch is Salesforce, who is rumored to have rebuffed earlier acquisition efforts by Microsoft. The LinkedIn data may be a way to get Salesforce back to the negotiating table, especially if it makes the difference in deciding which CRM system to use.

While these are some exciting times for LinkedIn, there are a few “gotchas” that make pause in my all-out enthusiasm for the deal. I’m on the lookout for three things:

  • Integration versus independence. Microsoft bought Yammer, an enterprise social networking darling, and then proceeded to strip it of much of its magic in an effort to integrate into Microsoft Office offerings like SharePoint. This time around, there’s widespread commitment to keep LinkedIn as an independent unit — which can then slow down integration where it’s most needed to drive value. If the core business remains strong and independent — but the data is accessible via deep integration and rich APIs then I think this will work. Don’t spend endless cycles trying to reconcile completely different value propositions, salesforce, and incentives — simply build LinkedIn data into Microsoft products as a value add to attract and retain customers. Keep. It. Simple.

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Helping leaders thrive with disruption as a Principal Analyst at Altimeter, a Prophet company. Author, Engaged Leader & Open Leadership. Co-author, Groundswell.

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Charlene Li

Helping leaders thrive with disruption as a Principal Analyst at Altimeter, a Prophet company. Author, Engaged Leader & Open Leadership. Co-author, Groundswell.